You can find the full article in its original version here: He fulfilled his dream on Wall Street. Now he invests billions from Czechia and advises: Don't buy individual stocks.

Buying individual stocks makes no sense whatsoever for 99.9% of people, says investor Michael Kollar. After 20 years in finance, he has launched his own fund.

He left his native Bratislava at the age of seventeen and headed straight for the United States to fulfil his dream: to work on Wall Street. Michael Kollar graduated across the Atlantic and in 2008, as the economic crisis was setting in, he was fortunate enough to land a job at the Australian firm Macquarie, one of the largest investment companies in the world. He ended up staying there for seventeen years. Kollar himself executed transactions worth more than twelve billion euros there; in total, Macquarie has fifty times that amount under management. For the past two years, however, he has been back in Europe — he moved to Prague and launched his own fund, which manages two billion crowns nine months after its start.

In New York he experienced an extremely competitive environment, one in which people are willing to work until four in the morning and walk over dead bodies. "In investment banking you work 100 hours a week. You spend most of your time with your team, and when you have people from Harvard or Stanford around you, it was hugely motivating and took me to a completely different level," says the forty-year-old investor, whose professional career has also taken him to London and Munich.

His specialisation is private equity — large investments in established companies that are subsequently transformed and passed on to new owners. And although he is a seasoned investor, he warns the general public against investing in individual stocks, not least because he got burned himself. "It's not rocket science, but it isn't entirely simple either. I wouldn't dare do it myself. And that should be a warning red light for an investor who hasn't spent their whole life working in finance," says Kollar. One thing he does not much like recalling is betting against Apple.

In this interview for CzechCrunch, Michael Kollar talks about investing in general and people's approach to it, about the importance of luck and about his career, but also about his new fund, GateVest. He personally has four million euros in it (just under 100 million crowns), its largest investor is the J&T group, and unlike the vast majority of similarly focused funds it operates without management fees. It is financed purely out of returns — so if Kollar loses money, he takes nothing out of the fund.

Your father is a well-known economist and banker in Slovakia; from the early 1990s until 2006 he headed Volksbank. So I assume you found your way into the world of finance thanks to him?

Yes, it passed from one generation to the next. He certainly steered me towards it as well; he was always pleased when we, his children, followed in his footsteps. The turning point came when he took me to work with him at around the age of eleven and showed me around — I was so thrilled that I began dreaming of working on Wall Street one day. Honestly, if I had decided purely on my own, without my parents' influence, I might not have gone into finance at all.

When you say your father was glad his children followed in his footsteps… He was also a member of parliament for six years. Does politics appeal to you?

No, not at all. I'm more the typical Slovak in the background who follows everything and grumbles. (laughs) I have no ambitions to go into politics, perhaps in part because I experienced it at home. My father went into it with grand ambitions to change something and after six years he literally gave up, saying it was pointless, that you're banging your head against a wall. His experience left a rather negative impression on me.

So you're focusing purely on finance?

Yes, I'm focusing more on making use of what I learned over twenty years abroad. When I came to Czechia and got a partial feel for Slovakia as well, and saw how funds work here, I was negatively surprised. I had hoped the market was further along and that things were done with the aim of doing everything for the benefit of the end investor. That isn't always the case. It strikes me that in recent years it has been a bit like a gold rush. Everyone who can is setting up a qualified investors fund; on a per-capita basis Czechia would probably rank very high in the world.

Why do you think that is?

It appeals to a lot of people. Investing is interesting in that it is one of the most important decisions we make in life. Of course we choose a partner, we decide what to pursue in our careers or where to live, but we also accumulate some financial resources and then invest them, which has an enormous impact on us over the long term. Thanks to compounding, a bigger one than most people realise.

And yet it is one of the things people like to do themselves, without taking advice from experts. I find it almost absurd that when I'm ill, I go to a doctor; when my car breaks down, I go to a mechanic… Whatever I need to sort out, I go to a specialist — I don't go looking for YouTube videos on how to repair a gearbox so I can do it at home myself. With finance, by contrast, most people say to themselves: "I can see good companies, I'm going in, I'll buy their shares, I'm surely better at this than everyone else."

What are the reasons for that?

For one thing, it is extremely accessible — you download an app and you can be trading within five minutes. It is also exciting, because it is essentially gambling. Watching stocks go up and down is like being in a casino. Another problem is that it takes an awfully long time before it becomes apparent whether someone is doing it well or not. People who don't understand investing often tend to judge results over a few months, or a year or two at best. Our fund has been in existence for nine months and we have an annualised return of 23 percent, but I will be the first to say that this means nothing. There needn't be any skill behind it; it may be pure luck.

Real results only show up over a horizon of five or ten years. Over the long run, some people then discover that trying it themselves doesn't really make sense. Some never work it out, though — they invest their whole lives and carry a selection bias in their heads: they remember the handful of stocks that went up and tell all their acquaintances about those, so as to be admired for how well they invested. The less successful episodes they somehow forget.

Another factor occurs to me — it may have something to do with the fact that financial advisers generally don't have the best reputation.

That's true. But I don't think we can blame the advisers alone. When the system rewards advisers for selling the products with the highest commissions, their results will look accordingly, particularly when the regulator doesn't make sure it works differently.

Do you invest in selected stocks yourself?

Investing isn't rocket science or heart surgery, but it isn't entirely simple. I wouldn't dare do it myself. And that should be a warning red light for an investor who hasn't spent their whole life working in finance. When someone who worked on Wall Street and has twenty years of experience says that even he wouldn't dare buy individual stocks, how can I think that I'll manage it when I have never done it in my life? There should be education so that people understand that buying individual stocks over the long term makes no sense whatsoever for 99.9 percent of them — myself included.

Are you speaking from your own experience? Have you ever tried it?

I have, sometimes relatively successfully; on other occasions I managed, for instance, to short (speculate on a fall in the price – ed. note) Apple.

Given their performance on the market, probably not very successfully…

That's right — Apple has not been possible to short very successfully over the past twenty years. When the iPhone arrived and Androids were starting out, I said to myself that an iPhone costs a thousand dollars, whereas you can buy a phone that does exactly the same thing for 150 dollars, so there was no reason why Apple should do especially well. Fortunately I didn't lose much on it, maybe some ten thousand dollars (over 200,000 crowns today), but it was a good lesson for the future and I steered clear of trading individual stocks after that.

When you trade individual stocks, you are implicitly claiming not only that you are better at pricing individual companies than each and every investor in the market — you are even claiming that you can judge it better than the collective knowledge of all other investors, and that is already a very bold claim, one that over the long term proves wrong in the vast majority of cases.

Your professional lessons, though, were learned mainly abroad. How did you get to the United States?

While still at secondary school, in my third year. I saw it as a springboard for fulfilling my dream of working on Wall Street, and I knew it would make applying to American universities easier.

What appealed to you so much about the USA in particular?

It's a bit of a cliché, but I always saw America as a land of unlimited opportunity. If you work on yourself and are willing to sacrifice a lot for it, the country can offer you a great deal. Today that no longer holds to the same extent as twenty or twenty-five years ago, but even back then people were saying that America's era was ending and that China, India and others were on the way. That didn't materialise; the US share of global GDP has risen significantly further, while Europe has gone in the opposite direction.

And how did you get to Macquarie?

The year was 2008, probably the worst year in history to be finishing a degree in finance…

The collapse of Lehman Brothers and the global financial crisis — excellent timing indeed…

Students generally apply for recruitment a year before finishing their studies, and the vast majority of banks had effectively stopped hiring altogether by the end of 2007. And if they did hire, they went to the ten best schools, where they picked two students; it was an extremely competitive environment. On top of that, I was often rejected outright because I didn't have American citizenship and they didn't want to deal with visas. At that time I went through around a hundred interviews and received one single offer — from Macquarie. They were relatively new to the American market, they hadn't yet built a name, and students preferred to work for Goldman Sachs or J.P. Morgan.

In the end you stayed at Macquarie for seventeen years, first in New York, then in London and Munich as well. I know that's a very long stretch, but what did this chapter teach you most?

Two things I enjoyed most. First, working with capable, well-educated and motivated people. It was an extremely competitive environment, and people who were alpha types even within their own schools were willing to work until four in the morning and walk over dead bodies just to get ahead of you. I subscribe to the idea that a person is the average of the five people they spend the most time with. In investment banking you work 100 hours a week and you spend most of your time with your team. When you have people from Harvard or Stanford around you, it is hugely motivating and it took me to a completely different level. For the person I grew into, I have precisely that environment and those people to thank. It isn't something I would attribute to myself on the grounds that I tried hard, or that I had some special talent or genes.

The second thing I enjoyed most was that Macquarie at the time couldn't compete with the other giants, so we were very opportunistic. We had to move around a great deal and try different things. Over five years on Wall Street in New York we did an enormous number of different transactions, deals and structures — everything from M&A advisory for publicly traded companies through commercial banking to fund fundraising and development projects. Over those five years an endless succession of topics and perspectives came and went, which taught me far more than if I had been doing the same one thing over and over at another firm.

What then led you to close this chapter after seventeen years?

There were several reasons behind it. Even while employed, I wanted to invest my own money in private funds — they are my personal specialisation, yet until then I hadn't been doing it. I had always invested mainly in ETF index funds, because after the experience with Apple I preferred to steer clear of stocks, and in buy-to-let flats.

Although I was a relatively successful investor in that area, it was more luck than judgement. Anyone who bought flats in Bratislava over the past twenty years with euro financing at a rate of 0.9 percent couldn't lose money. I was aware that I am no Warren Buffett when it comes to investing in flats — I was successful thanks to the structural set-up of the market and my luck in hitting that particular timing. And I was looking for diversification.

Did you also invest your money in Macquarie's funds?

I didn't want to; I was already overexposed by working there and having all my income come from there. So I began looking at options for allocating money into private equity and talked to colleagues, family and acquaintances. The goal was to put together ten to twenty million euros and invest it ourselves. I did it alongside my job and gradually it gained momentum and more people joined.

As I was devoting my weekends to it, I could no longer really keep up, and I decided to pursue this activity full time under the GateVest banner. GateVest didn't come about because I wanted to be an investment manager and be paid for providing services, but rather because I am an investor — let people join alongside me, and if I allocate the money well, I can take something out of the return. If not, I get nothing, because we have no management fees.

Was the launch of GateVest also connected with your move to Prague?

It was one of the driving forces. Every city where I lived and worked had its role in a given decade of my life. First New York, then London, Munich and finally Prague. The older I get, the more I seek out calmer places closer to my roots.

What was it like to start your own firm without the backing of a giant global financial group?

I went from one extreme to the other — from a firm operating in thirty countries with 18,000 employees to a project where I was the only person. It's chaos. (laughs) I'm not saying it took me completely by surprise, I expected it, but the past year has been extremely demanding. I took a lot of things for granted and suddenly I had to do them all myself.

Such as?

Things as basic as buying a computer and discovering that most of them don't come with Office installed, so you have to go and buy it separately. These are trifles, but when they hand you a computer at work and Office is on it, you assume it is just somehow there… So in my own firm I was accountant, lawyer, IT, consultant, assistant and secretary all in one.

Raising the first capital from the first investor was demanding. At the same time it was an exciting period, because I enjoyed and still enjoy building something new and watching it grow. What I like most about having my own fund is that I can't put the blame on anyone else — when things go well I can congratulate myself, and when they don't, all I can do is bang my head against the wall for not having got something right.

Where does GateVest stand now? How do you assess the launch itself?

When we spoke with J&T a year ago, we set ourselves the goal of reaching 20 to 30 million euros in the first year. We're at 80 million after nine months, so we're successfully beating our targets. The fund's performance is good, we're at 23 percent annualised. As I mentioned, that means nothing, but it is better to start with 23 percent than with three. We're on a good path to building something on a larger scale. The firm is growing not only in terms of capital; there are already seven of us on the team, so we're gradually expanding. So far, then, there is satisfaction.

And where will GateVest be in five years, say?

That's hard to say. All my life I have set goals in the form of inputs, not outputs. When a footballer runs onto the pitch and tells himself he'll score a hat-trick and they'll win 3–0, it may or may not come off regardless of his performance, because an enormous number of external factors are at play. That is why I never give a direct answer to the question of what number we're targeting or how much capital we want to raise. It's an open-ended fund; in five years we may be at 150 million euros, or we may be at 1.5 billion — that I can't judge.

So what does your focus on inputs look like?

I want to give the fund 120 percent so that investors are satisfied, which comes first, and so that the money is sensibly invested. After all, I have over four million euros of my own capital in the fund, so the return matters to me from that perspective too. Where the firm goes in terms of size, employees or volume of capital, I leave to fate. A financial crisis may come, we may invest extremely well and the volume still won't increase. And it can be the other way round too.

What do you consider the biggest challenge in this context?

To be successful, we have to catch the right wave, which is not fully within our control. Take the past eight years as an example: for the first four years private equity was among the best-performing asset classes globally; over the last four that no longer quite holds — it is generating six to eight percent. What the next four years will look like, nobody knows. But whether you catch one kind of four-year period or the other is precisely what decides whether in five years you are sitting on five billion or on 150 million. It is largely a matter of luck. Most people will claim it is their skill and hard work. I openly admit that luck plays a bigger role in life than we care to acknowledge. And it will play an enormous role in GateVest's growth too.